Adani Wilmar cuts IPO size to Rs 3,600 cr

Edible oil major Adani Wilmar Ltd (AWL) has reduced the size of its initial share sale to Rs 3,600 crore from the Rs 4,500 crore expected earlier, people familiar with the development said on Friday.

The company, which sells cooking oils under the Fortune brand, is expected to launch its initial public offering (IPO) this month, they added.
AWL is a 50/50 joint venture between Ahmedabad-based Adani Group and Singapore-based Wilmar Group.

Now, the IPO will include a new issue of shares worth Rs 3,600 crore. There will be no secondary offer.
According to the red herring draft prospectus, it aimed to raise Rs 4,500 crore from the market by issuing new shares.
The company only reduced the share of general corporate goals and not reduced the main objects of the show.

Out of the proceeds of the IPO, Rs 1,900 crore will be used for capital expenditure, Rs 1,100 crore will be used for debt repayment and Rs 500 crore to fund strategic acquisitions and investments.

Contacted to confirm the development, a company spokesperson declined to comment.
The decision to reduce the size of the IPO is seen as a good decision by investors, because optimizing the size of the issuance will help the company to achieve a better return on capital employed (ROCE) and a better return on equity (ROE).

It indicates the operating leverage and efficiency that the business is able to demonstrate through minimal investment and it also suggests the revenue that the business is able to generate with minimal capital employed and generate returns.

Despite the reduction in issue size, the company will be awash with high cash generation as it will fully repay the long-term loan of Rs 1,100 crore and save on interest charges and will also finance all capital expenditure (capex) through equity.

AWL, which is among the leading food FMCG companies in India with revenue of Rs 37,195 crore, plans to aggressively review M&A (M&A) prospects in the food industry. food. The company can acquire a brand or a business active in the categories of food, basic products and value-added products.

Currently, six Adani Group companies are listed on national stock exchanges. Apart from Adani Enterprises, other companies listed are Adani Transmission, Adani Green Energy, Adani Power, Adani Total Gas and Adani Ports and Special Economic Zone.